IRS faces new scrutiny for $49M meetings tab

WASHINGTON — The Internal Revenue Service spent an estimated $49 million on at least 220 conferences for employees over a three-year span beginning in fiscal 2010, according to a forthcoming report that will prompt fresh scrutiny of the already embattled agency.

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The findings come as the Obama administration is overhauling the agency after officials admitted that dozens of groups were inappropriately scrutinized as they sought tax-exempt status. The admission forced the resignation of the agency's acting commissioner and has sparked criminal and congressional investigations.

Seeking to get ahead of the fresh controversy, IRS acting Commissioner Daniel Werfel acknowledged the report in a statement late Friday, but he didn't share any of the findings. He called the spending "an unfortunate vestige from a prior era" and said that the agency has significantly curtailed conference spending in recent years.

The audit is set for release Tuesday and was prepared by the Treasury Inspector General for Tax Administration, the same entity that confirmed allegations against the agency's tax-exempt unit. Details of the report were shared by several congressional aides, who were briefed on the report Friday.

The report is reminiscent of findings released last year after a similar investigation into lavish spending on conferences hosted by the General Services Administration, revelations that prompted other inspectors general to launch inquiries as the Obama administration ordered cutbacks in such meetings.

In its report, the Treasury's inspector general provides detailed estimates on hundreds of IRS conferences, but investigators couldn't verify the total costs because the agency failed to keep records of all expenses, according to the aides.

The report focuses especially on an August 2010 conference held in Anaheim, Calif., for roughly 2,600 agency employees in the IRS's small business and self-employed division, a unit that assists small business owners with tax preparation and is based in Lanham, Md.

The conference cost roughly $4.1 million and was paid for in part with about $3.2 million in unused funds from the IRS's enforcement budget, a decision that didn't violate IRS guidelines, according to aides briefed on the audit.

During the conference, employees watched two training videos starring division employees that cost at least $60,000 to produce, according to the audit's estimates.

The first video is a parody of the Star Trek television and movie franchise and stars division employees discussing how they might identify and address allegations of tax fraud. Aides briefed on the audit said employees paid for Star Trek uniforms they wear in the video, but the agency paid for the construction of an elaborate mock-up of the bridge of the starship Enterprise, the vessel used to transport the show's characters.

The second video stars some of the same employees learning how to dance the "Cupid Shuffle" from a 2007 song by the performer Cupid.

A spokeswoman for the inspector general's office declined to comment until the report is publicly released.

Werfel will make his first public comments since becoming acting IRS commissioner on Monday at a House Appropriations subcommittee hearing on the IRS targeting scandal. He is a former White House budget official, who took over the IRS after President Barack Obama forced out the former acting commissioner last month.

Acting IRS chief Daniel Werfel is set to testify at a hearing on Monday in the targeting scandal.